Verizon: We'll Likely Sign a Similar Deal With Netflix → Re: One by one they go...

in some ways this reflects multiple problems. First off is the death of net neutrality.

But no I see something far deeper... Netflix Streaming filled a hole that big firms like Verizon and Comcast should have never allowed to exist to begin with.

It has nothing to do with net neutrality, it's simple economics.

hyperbole much?

"What we have here is "double dipping".

Not really... Since the inception of the internet, companies pay ISP's so people can access thier content (for example). People pay ISP's to be able to reach content.

It makes sense to me that Netflix would streamline the process to get content to Comcast users by doing way with the middle-man (Cogent). Who knows, by striking a deal directly with Comcast, Netflix may pay less in the long run. Why? because they no longer have to pay cogent for the traffic from Netflix to Comcast.

The problem was how Comcast and Verizon forced Netflix's hand by imposing data rate reductions to consumers from Netflix(cogen).

We will let Congress sort that part out.

If Comcast was the one charging the customer more for access to Netflix, then yes, your graphic would be correct. Based on your username, I assume you know what peering agreements are and how they work, so I'm not going to re-explain it.

But let's say you are a backbone provider, let's just say Cogent, but it could be any of them, and you had one of your customers that generated a huge amount of traffic. One of your other customers, let's say Comcast, but it could be any reseller/ISP, who received a huge amount of that traffic.

The peering point is becoming saturated with all the traffic that is being requested by Comcast's customers. They are not sending as much traffic as they are receiving, so the ratio is way off balance. Comcast is not interested in paying more money to that provider than they already are, and Netflix traffic suffers. The people being hurt here are Comcast's customers who are also Netflix customers. No one else, really.

There are many ways to play this.

1. Comcast will pay more money to Cogent to upgrade the saturated link, because they are receiving more traffic from them than they are sending. This is probably what *should* happen, but would result in the exact scenario you purport above, you want Netflix, you pay more for the service. We have avoided that scenario today.

2. Comcast does nothing, and the Cogent traffic degrades.

3. Netflix pays Cogent to upgrade the saturated link.

4. Netflix finds another backbone provider to haul the traffic to Comcast, possibly with better terms than that of Cogent.

5. Netflix effectively becomes their own backbone provider by moving the content right to Comcast's border, thereby being able to provide their customers with service and save money by paying it to Comcast for colocation rather than Cogent for transport.

Option 5 was chosen. It's a win for consumers, they won't pay more money, as the money Netflix was using to pay Cogent can now be used to pay Comcast, with little congestion. Consumers won't pay Comcast any additional money, as they're now *making* money where they probably would have had an additional cost.

The only real loser is Cogent, as they don't get to make more money to transport Netflix's data to Comcast, like they wanted. But at the same time, their costs should now go down as well. So they probably break even either way.

How, exactly, is this "double dipping"? Comcast is charging Netflix to colocate equipment in their facilities or transport data directly to serve their mutual customers. Without knowing the terms of the deal, there's no way to say who's getting screwed. Comcast might be charging less than their actual cost to colocate/transport. We don't know. Netflix might be paying more than they were paying Cogent, thereby they are taking a loss. We don't know. I'd say, probably, they're paying less than they were to Cogent, and Comcast is still making a few extra bucks off Netflix. But again, that's just speculation.

But how, exactly, this is creating an Internet where I, the consumer, am paying more to the ISP to access third-party services, I just don't see it.

actually I think option 4 was chosen but that other provider happens to be Comcast itself

Imposing data rate reductions? You mean by not paying more money to upgrade backbone connection/peering points that are saturated from a slew of their customers all accessing one third-party service during peak periods? Sure, I guess Comcast and Verizon could have done that, but then they would have had to pass that cost along to *all* subscribers, whether they use Netflix or not.

Or, they could just charge their customers who want to use Netflix specifically an extra monthly fee for the privilege. Which would you have chosen?

People pay ISP's to access Internet content -- not content of the ISP. If a provider is unable to deliver said content a customer in a world where there was competition would choose another provider that could. What we have is a monopoly or a duopoly for Internet access so the providers can get away with charging for the same bandwidth twice. They advertise high speeds but don't want you to actually utilize them so they don't peer at a high enough capacity with other providers for their customers to actually use the bandwidth they are paying for.

This is a peering deal. Although it's kind of tertiarily related, this is NOT a net neutrality issue.

[Please stop using the term "backbone"; no network of any measurable size has a backbone. (a single link, switch, or area through which all traffic flows.)]

I think I've come to the root of the issue: Either Netflix underestimated the capabilities of their new ISP (Cogent), or Cogent lied (failed to disclose, whatever) about their interlink capacity with other consumer networks. While Cogent is being paid by Netflix to carry this traffic, so are the consumer ISPs -- their customers are the ones asking for it, after all. Now Cogent knew, or should have expected, their links would be insufficient. In that, I have to side with the Verizon's of the world...

Why should Verizon (et. al.) pay for upgrades to interlinks with Cogent because of one of Cogent's customers? Ideally, both Cogent and it's peers should carry their part of the burden; Cogent has a responsibility to it's customers (Netflix being but one), and likewise Verizon (et. al.) have a responsibility to theirs. But, the Cogent links aren't being saturated because Cogent has so many customers, they're flooded by. a. single. customer; a customer that could change providers at any time and move the whole mess to different set of links. Cogent isn't willing to buy the necessary bandwidth to support it's customer, and the other operators aren't about to give it to them for free.

It's not so much "net neutrality" as extortion... "Hey, Netflix, ya' know, if you wanted to improve the experience for your customers within my network, I could hook you up with a "fair" deal on a 10G metro-e." (or, maybe, use a transit provider capable of carrying your traffic.)

This is a peering / interconnection issue that has nothing to do with net neutrality:

quote:

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But the truth is that neither the Comcast deal nor any deals that Netflix may strike with AT&T, Verizon or any other ISP has anything to do with Net neutrality.

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AT&T, Verizon may join Comcast in Netflix streaming deal

Netflix operates its own CDN. And like every other CDN, it should pay for interconnection to retail ISPs. This is nothing new or "ominous" nor does it set any sort of "bad precedent". It is exactly how the Internet has worked for the last twenty years.

The bottleneck isn't really the last mile connection (although you shouldn't expect HD streaming over a 1.5 DSL line). The bottleneck is the peering connections between the retail ISP and the CDN. If the CDN brings more traffic than the peering agreement allows for, the ISP has to open up more peering points. The question is, who pays for that? As usual, it comes down to money.